>> kicked out. nofi's board- sa chris after six years at the helm. >> looking to goldman sachs. qe on the agenda, when will the fed deliver a rate hike? good morning to our viewers in europe, good evening those in asia, and a very warm welcome to those just waking up in the u.s. i'm guy johnson. >> straight to our top story.

sanofi's cl has been removed. zeli, great to have you. this was rumored to have happen. >> there was a rumor that something was cooking. today they decided to fire him. >> how significant is this? someis is a company that analysts have said was not investable, chris viehbacher made it investable. putting aside their while yesterday, had relative to its market since the ceo came into place. a third-best. right.doing something

i'd never heard a complaint outside about chris viehbacher. the boardr from what has said and the media commentary and the press release that they did not get on. there were discussions that had not been cleared with the board, etc. what next? come out of this looking good? the board cannot come out of this looking good. >> it does not look great. they are going to say -- they've been saying they're going to stick with the same strategies. a board is going to look for a ceo. one wasl say the last too much of a maverick, did the things without consulting us. forho would want to work the sport? >> if they are saying the strategy is what it is, which will want to do that?

>> they are looking for a caretaker. someone to execute. >> that is one way of looking at it. >> two we have any names? >> it is too soon. listen to the room or milla little. >> -- to the rumor mill a little. on investable -- is sanofi uninvestable? >> there is a vacuum at the top. uncertainty about who the ceo is. will they stick to the strategy, etc. how is the company going to deal with the pressure of diabetes and the pricing pressures in the u.s. >> pharmaceutical companies employ smart people. they need to have these kinds of guys.

a such a thing happened to media company you would be talking about people locking the door. does that happen at pharmaceutical companies? >> i do not have data but i think not. it is possible that some of the key elements, vicki operators within the business who were allied with chris viehbacher, he brought in, might follow him elsewhere or decide this sounds to concern for me. i will do something. there are a number of biotech companies. that is possible. -- i think it is not as acute as you would have expected if this was a tech company. >> thank you. european research at bloomberg intelligence. >> deutsche bank has swung to a 94 million euro loss in the third quarter.

on litigation charges. germany's lender set aside almost 900 million euros. hansng us with more is nichols. let's start with numbers. 94 billion euros in the third-quarter loss. compared to what they had last year this quarter, 40 one million gain. it is not all bad news. their pretax profit was up 200 66 million euros. compared to around 12 mean euro before. "on the markets trading and equity trading, they did better. bank andine -- on equity trading, they did better. they have the idea that they will have another 1.1 billion litigation charge. when you look at fixed income commodities, this is where a lot .f banks have bread and butter

deutsche bank is no different. they came in at 1.4 billion, date 1.8 billion the previous quarter. let's compare deutsche bank to competitors. staggering.are strate america, five .6 billion dollars. goldman sachs, just shy of $200 million. at $1.13 billion. they are talking to authorities about settling the libor charge. we still do not know about the currency manipulation charge. that is the biggest uncertainty. >> what about management changes? >> musical chairs. they have posed someone from goldman sachs. there is a goldman banker, he was at goldman for about a year.

a germany he was at utility company. a lot of financial experience. replacing stefan krause. krause will stay on as an advisor. they are expanding the board, nine members strong. -- with one bank pledges from another it tells you something. they are looking for talent and for a change. very much.u hans nichols. another update from bloomberg international correspondent hans nichols in the next hour. >> the man. there is a bromance. >> there is. >> air france profits fell by 61% in the third quarter. the company was recently rocked by a labor dispute causing a

pilot strike. let's go to caroline connan in paris. general are under pressure. air france is a story of strikes. a 14 day strike that happened in september, that cost 330 million euros of operating profit for the group in the third quarter. year, the airline is expecting that the strike will cost 500 million euros. they are going to accelerate cost catching and put in place a new plan. ,arlier this month, the ceo hasac, has said the strike cost one year of their restructuring plan. with klm, the group is a expected to have positive

earnings. into account take klm, air france will be losing money for the sixth consecutive year. >> walk me through the events that face air france. what happens in the next quarter ? what is the ongoing story? >> the main concern is how will bookings be affected for the fourth quarter. whether the strike has affected the bookings and also psychologically the customers of air france-klm. the second fear is also the impact of the sluggish economy in europe. you have fears about the ebola outbreak. the cfl is saying the ebola outbreak is not having a significant impact. there has been a decline towards

some eastern and western africa destinations for air france. in the long-term is about competition from local carriers, where the strikes started in the first place. some people from the unions of pilots are saying that you can born a local carrier but it is hard to become one. >> thank you. caroline connan from paris on air france. >> and unmanned commercial rocket carrying supplies to the international space station has exploded. it did sell six seconds from taking off in virginia. shares in the company operating the rocket fell by 17% after the explosion. the company says it will hold a federal investigation into what went wrong with the $200 million

spacecraft. thet the end of keeley -- expected today. the latest wave of asset purchases began in 2012. he said has bought three -- the billion ofght $3 assets. the next question is when it will raise interest rates. say they willies not raise objections over any member nation's 2015 budget after italy and france made a last-minute adjustments. will reduce its deficit and italy will cut 3.5 billion euros from spending. pemex state owned lure oil giants to mexico? oiling up mexico's industry. mexico's largest company.

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>> welcome back. as a real prices fall, mexico preparing to open its energy industry for oil investment. for more, we are joined in a bloomberg first interview by emilio lozoya, the ceo of state owned mexican oil company pemex. thank you for joining us on "the pulse." on falling oile

prices. does the low price meeting your production plans will have to be delayed? especially deepwater. >> thank you, it is a pleasure to be here with you. oil prices are important to us. any major oil company. in the context of the reform process we have embarked on in mexico, the short-term impact of prices will not divert us from taking long-term decisions. developmentosts of is around $22 per barrel. our projects are profitable at current levels, as we speak. therefore, developing shallow water or onshore fields continues to be our plan. including, as well as you have mentioned, deep water projects

at current levels. are stemming from energy reform and look interesting. we will pursue them. >> good morning. it is guy johnson as well. what is your expectation going forward for the oil price? it seems to have caught many by surprise, the drop we have seen recently. didn't catch you by surprise and what do you expect from here? is an important participant in the market. we've been monitoring the price. we are in the business for the long term. as i was mentioning, the projections of the oil price will not divert us from taking this long-term decision. our view is that demand will take up. asia will continue to grow.

showsice of oil over time probably a plateau at higher levels. market volatility stems from other parts of the world. we will be looking at this with cautious. >> give me a sense. you've had a tough time recently. straight reported 8 quarterly losses and in the third quarter you have a loss of more than $4 billion. how are you maintaining operations with such massive losses? is taxed heavily under the oil regime. approved inntly mexico energy reform that fully transforms the system for the oil industry. pemex will face, starting in 2015, a lower tax rate. therefore, our ebitda and other

financial indicators will look very different. if you look at pemex from an ebitda standpoint, we have one of the strongest ebitda margins in the industry. what really effects pemex today are the heavy taxes that the government imposes on pemex. reform addresses these challenges. by lowering the tax rate and allowing for the first time in for privateof pemex companies to come invest along with pemex. aat you will end up with is situation where private capital together with pemex will increase investments in the country, production will go up. but with lower taxes. therefore, pemex's finances will be strengthened considerably. >> wendy do you expect those losses to end?

you suggest you will have two other quarters of losses and that's it. of a course of next year and 2016, as a result of the new investments from private capital along with pemex, we will be able to increase production and hydrocarbon reserves more quickly. therefore these losses will be reversed progressively over the course of next year. >> when are we going to see the big sign? focus on?you his technical ability do you need? >> pemex has a very broad and diversified hydrocarbon-based. wehave onshore fields and have mature fields. we have light crude, heavy crude , shallow letter. as you asked as well, we have important reserves in deep water.

our variety of players is big. we've been talking to various oil companies on every segment of the value chain. not only upstream, midstream and downstream. it is a transformation for the company. company would undermine the -- speaking about one company would undermine the big interest mexico is facing. we expect to partner on 10 blocks. many of thete in bidding rounds that the government will be putting out for concourse over 2015. pemex knows those fields very well. we have unique infrastructure we can offer to partners. we are very enthusiastic about this reform process. it is a transformational moment

for the company. technology and the right type of financing structures to monetize those assets quickly. in a world where we seem to have a demand problem with oil. it is obviously a supply problem as well. does the world need more mexican oil right now? we seem to have a lot of it. opec continues to pump aggressively. we have shell out of the u.s. and canada. -- we have shale out of the u.s. and canada. the oil industry is putting in singapore. how do you fit into the supply story? is -- the large we will not see this overnight. incremental production mexico

participant will supply, those barrels will come progressively in the coming years. lookeality is that if you at the world economy, with a young population in some asian countries and the demand-side does not concern pemex at all. we believe demand will pick up. the in the medium-term or however you define that. very complex process that the international companies and national committees are facing. they are becoming more complex. thosest associated with products that we are facing will at some point be translated into the price. i am sure i speak for other large oil and death companies, needs to look at projects in the long term.

>> thank you so much. .milio lozoya, ceo of pemex >> decision day at the federal reserve. qe it the exit of -- is it the exit of qe? when do we get a first rate hike for the fed. some would like it sooner. that is the discussion. we will be having it in a moment. ♪

>> welcome back. let's get you up to speed with some of the asset classes on the move. equity markets in mainland europe pushing higher. the big mover on the ftse in london. the u.k. clothing retailer, missed across the board. downgrading forecasts for profit. they are blaming the weather. and peoplee weather are not buying jackets, etc. krone, updy norwegian by .7%. unemployment up to 3.7%. markets, treasury yields. the yield on treasury slightly lower ahead is a big fed announcement and the likelihood

qe will end. what does that mean, we will talk about it in two minutes. ♪

pulse,"me back to "the live from bloomberg's european headquarters in london. i'm francine lacqua. >> i'm guy johnson. leaders willnion not raise objections over any member nation's 20 15 budget. after france and italy made last-minute adjustments. france will reduce its deficit and italy will cut spending. >> north korean leader kim jong un is said to have executed

senior party officials on charges from grasp to -- from graft to watching south korean dramas. kim had his uncle killed last year. >> the fed will release its october meeting minutes. the latest wave of asset purchases began in september 2012. places investor focus on the central bank's next big move, when it will raise interest rates. >> let's bring in jonathan ferro and bloomberg economist david powell. we are done with qe, the debate has moved on. >> we are done with qe3. >> qe4 might be further down the road. the debate now is when do they start, if and when they start raising rates.

wille debate and the focus be on the statement. considerable time, what it means. we are not going to get janet yellen telling us. >> threat of communication needs to be refined. -- further communication needs to be refined. loaded.line is it is interpreted by the markets to mean we are dovish. if you take it away, it means we are hawkish. know if that is what they intended when the line was put there. they seem terrified of changing it for that reason. bullard, he'sames not a voting member but he was clear that maybe qe should be extended and possibly taken out in december. we are not normalizing yet, we are not ready. >> you are right in the sense that we are not done yet.

people expect us to likely, it is the most scenario. there is some room for surprise. bullard as opposed. even the latest highly unlikely, there is another option that they say we are going to taper but not $15 billion. we will taper by $10 million and leave a little bit until september. >> five-year break evens. 1.54%. years, two .31%. is there an inflation start we need to worry about in the states that will protect us from an interest rate hike? >> deflation is the reason alert has been opposed to full tapering and looking at a short-term inflation expectation. that is his argument for holding. inflation provides a reason for being dovish.

this is oil prices. we've been undershooting inflation because oil prices, which is out of their control -- >> i'm not sure it is oil prices. most major central banks are below their target on inflation. inflationand headline are at 1.7%. even if you strip out oil prices you have the same readings on inflation. it is not entirely and oil story. >> there a big contributor. ,> if you look at the eurozone headline is 0.3 and the core is higher. >> wages? >> wage growth is not there. demand is not where they like it to be. we're going to talk about the the fed is maintaining a balance sheet of $4 billion. >> the ecb would love that. >> there is no exit plan yet.

they are still going to be maintaining a large balance sheet. the issue is that he had -- the issue is that you have had the federal reserve with its mandate, price stability, jobs, the third wheel has been targeting asset prices and they've been targeting asset prices. ofre was a whole point qualitative easing, to push asset prices up and pushed yields down. to push you into riskier places. the third wheel, does that disappear? if you have been so entrenched into a policy to target asset prices, losing you pull back -- wouldn't you pull back? the fed has been terrified. >> that is because of market volatility. >> qe can stay on hold, jim said that without a

decline in economic data on the jobsite or a decline in inflation. that was off the back of market volatility. you cannot argue that they should ignore market volatility. this is one of the things they should be looking at. >> that is the point. >> the consequences, especially if the market volatility on the rest of the world, is significant. >> they are not worried about the rest of the world. >> should they be if you had the emerging markets knocking on your door. it is something that should be thinking about. >> it is not the mandate. the ecb is not mandated to be worried about -- >> there is growth in the mandate. >> your point needs to be taken tangentially. what essential to the fed thinking plastering the job

story looks stable, the growth story is -- what is central to the fed's thinking?the job story looks stable. what will delay the rate hike? >> the things they are looking at is inflation and unemployment. in the u.s., unemployment has dropped to 5.9%. the key worry is inflation. it is under the de facto target of 2%. areation expectations declining. that is the case for the dots. the international star is not asng to play on their minds much as some might think. should the fed take into -- >> it is not a global central bank. if i look at the wider numbers on participation, how much slack do they think is in the economy? participation rate in the states

stinks. the rate is lower but if you take a look at the wider measures of unemployment, is there a sense that there is still considerable slack. if you listen to people like larry summers talk about the cut in productive power of the u.s. economy, he is concerned. to what extent is that going to be influencing thinking within the fed >>? that is one of the reasons the market is going to be so focused. the phrase is significant underutilization of labor resources in the u.s. they will be focused on that today. that is a reflection of the fact that even though the unemployment rate is low there is still slack. if they want to become more hawkish because of the recent decline, they could drop the word significant. that would be a key. that is not really expected by most people. >> ok. thank you very much. >> david powell and jonathan ferro. let's switch gears and talk tech. 41 leadgle bought waze

dollars, it put israeli innovation on the map. another start up is promising to do for indoor navigation what waze did for outdoors. elliott gotkine has an exclusive report. >> israeli shopping centers are the perfect place to indulge, the perfect place to protest indoor navigation app -- the perfect place to road test indoor navigation app inside. app'm going to see if the can help me. lauren.e in ralph my phone realizes i'm outside the bebe store. it will give me directions. this way. >> you found me. >> is this like a gps for indoors like your car?

for indoorke waze navigation. the cameras open and understand the surroundings and we know where you are. we use the sensors to track your route. >> launched in august, inside works with big brands and models, shops, and hospital. it is working with stores to help customers can point and buy items. do we need indoor navigation? >> 90% of the time we are indoors. some people are in a rush. some people want to feel the same secure feeling when they navigate outdoors. asking, you can say i want to go directly to the store i want to go to. or where you park your car. there are so many things we can do. in what is becoming a crowded space. finland's indoor atlas navigates indoors. point inside uses wi-fi and

sensors. waze owner, google. power ofans to use the the crowd to build up its database. if you've got the sense of direction of a blindfolded badger, you need never get lost again. where did i put my wallet? elliott gotkine, bloomberg, tel aviv. >> elliott gotkine comedy blindfolded badger. >> that is getting monty python-esque. emilio lozoya austin -- >> will be back in a couple minutes.

>> welcome back. you're watching "the pulse." bloomberg's london headquarters. let's get energy security. ukrainian-russian energy ministers are meeting in brussels. staying warm this winter is the .op of the agenda ukraine seeking to avoid a winter gas cut. a background to what is happening with oil prices. good morning. let's start off with gas. terms, how much

destabilization are we going to see? how significant are these talks? most of the countries in central and eastern europe are relying on russian gas. countries like ease germany, 40% .ely, austria is 80% czech republic and hungary are 100%. if the russians to interrupt the supplies to the ukraine for any reason because they jack the price up again, it is going to have a knock on effect on the economies of central and eastern europe. vested interest today. >> even the u.k., tucson extent -- to some extent. there a supply agreement with russia. rise, will inevitably that news in the winter.

we had this conversation every winter. saying we must be less reliant on russian gas. yet here we are again. >> we are still relying on a rush we will be for a long time. in five years or 10 years, one of the ways in which europe may be able to diversify could be receiving lng shipments from the u.s. were starting to see that happen out of the baltics. equipment arriving that is going to make lng possible. how would just a click feasible is it to make that happen? logistically feasible is that? >> it costs a lot of money. you have to take a view of how robust in europe.

is it going to grow to justify that investment. that is a big issue that has to be settled at a government level two incentivize things like that. let's talk about oil. you wrote a report saying is this a repeat of the crash we saw in 1986? if it is, prices can still fall. >> we are not in the same situation when there was a price collapse. we are seeing a correction. some of the events of today there are some blends -- some of the events of today bear resemblance. back ourtting expectations. on the supply side, in 1986, we had a new player on the scene that went from zero to 6 million barrels in a few years, the north sea. in 2014, we have a new old player, the u.s.. much has gone from 5 million 9 millionday to

barrels a day. there are other suppliers coming into the market. as in 1986, in 2014, we have lots of supply and very sluggish demand. prices can only go one way. >> we were talking to pemex. the boss was telling us -- area that there is a lot of information about the resources. beis probable there will more appraisal and they will find they have more resources. it is a long way from where we are now. i asked a question about shale in the states. the russians seem to think breakeven is around 80. >> that is not accurate. back in 1986, everybody thought a collapse in oil price with me bet north sea products would

taken off the market because costs were too high. what people are overlooking is that in the u.s. in 2014 all the land was bought years ago. the appraisals were done years ago and on the investment has been sunk years ago. lderou like, the o new shale development only have to cover their operating costs. well below $40 a barrel. >> people are afraid of losing their jobs. >> yes. what will happen, this happened 30 years ago. pressure, with price people in upstream look for ways to make the process more efficient and try to find new ways to innovate technically. it is amazing how ingenious the industry can be. what do you expect the price of oil to be six months from now?

in spring of 2015 when the winter demand is over, unless there is a major change to the fundamentals, the price of brent will be $75 or a few dollars below. >> that's going to hurt a few people. going to hurt the russians. it is going to hurt the iranians if they are not able to support any more than they currently do due to sanctions. it is going to hurt the middle east both producers. you cannot make water run uphill. fundamentals of supply and demand. >> we will take a break. you can follow us on twitter. join the conversation. i am @guyjohnsontv. i am @flacqua. ♪

>> welcome back. emerging markets are starting renewable energy projects at almost twice the rate of developed nations. let's bring in victorino.

what we arense of talking about. >> climate scope, it has been the third year we've done this project. this year it is different. from 26extended it countries in latin america and the caribbean to asia and africa. it is a ranking of 55 emerging markets in terms of their investment climate for clean energy. >> how did you divide the ranking? ofwe sent researchers to all these countries to speak with government officials and project toelopers on the ground gather data on things like what policies there are in the countries, the structure of the market have open -- and how open it is. what companies there are. we put all this information came a ranking.

>> house apprised were you? that theprised emerging markets did so well. a lot of them have more sun. is it as basic as that? >> not yet. i wish it were. in terms of what was and what wasn't surprising with the was less what surprising is that china did so it was number one followed by brazil. there were three sub-saharan africa countries in the top 10. south africa in third place and then kenya and uganda. south africa has seen a massive ramp-up in clean energy investment in the last two years. about $10 billion. very minimal investment prior to that. , they havend uganda

robust policies to promote clean energy. they also have a good value chain for clean energy companies operating in the countries. >> those are countries that do not necessarily do well in terms of gdp. this is an important investment. we look at clean energy investment in general. to make it as level as possible a playing field, otherwise china would win everything. we compared investment with gdp. uruguaycase, it was that topped the investment parameter. they've launched their tendering system and they've seen an increase in investment. >> thank you so much. >> we're going to be talking more about what is happening in the telco sector when we come back.

does the ceo think about the new commission story? ♪ .

react based onst our fears, says president obama. the world health organization said liberia may have turned the corner on ebola. the fed rate not decision, trick

or treat for talks and ups. six days to midterms. republicans consider majority options. good morning, everyone, this is "bloomberg surveillance." we are live from our world headquarters in new york. i am tom keene with scarlet fu and brendan greeley. let's get to an explosive top headlines this morning. >> investors are waiting to hear from the fed this afternoon. rent a cap their two-day meeting -- wrapping up their two-day meeting. janet yellen and her console in the bond buying program as planned. they may also underscore their troubles by falling inflation. in the last month, oil prices have dropped 14%. failure for nasa kind of seconds after launch from virginia, an unmanned rocket carrying supplies to the national space station first and a huge fireball. the et